The Sheepskin Shoppe bought 375 sheepskin coats for $75 000; 115 coats were sold at a markup of 210% of cost and 95 coats at a markup of 145% of cost; 25 of the coats were sold during a clearance sale for $260.00 each and the remaining coats were disposed of at 14% below cost. What was the gross profit based on selling price?

Question

Quizplus · Accepted Answer

The first step is to calculate the total revenue from the sale of the coats:

- 115 coats sold at a markup of 210% means that the selling price was 3.1 times the cost: 115 * 3.1 * cost = 115 * 3.1 * 200 = $71,650
- 95 coats sold at a markup of 145% means that the selling price was 2.45 times the cost: 95 * 2.45 * cost = 95 * 2.45 * 200 = $45,775
- 25 coats were sold at $260 each, which gives a total revenue of $6,500
- The remaining coats were sold at a discount of 14% below cost, which gives a total revenue of 0.86 * 65,000 = $55,900

The total revenue is therefore $179,825.

The cost of the 375 coats was $75,000, so the gross profit is:

Gross profit = (total revenue - cost) / total revenue * 100%
Gross profit = (179,825 - 75,000) / 179,825 * 100%
Gross profit = 58.307%

However, the question asks for the gross profit based on selling price, so we need to use the formula:

Gross profit = (total revenue - cost) / total revenue
Gross profit = (179,825 - 75,000) / 179,825
Gross profit = 0.58307

Multiplying by 100% gives a gross profit based on selling price of:

Gross profit based on selling price = 58.307%

The closest choice is C, which is 49.47%.

The Sheepskin Shoppe Bought 375 Sheepskin Coats for $75 000;